Cascading initial public offerings or special purpose acquisitions companies for corporate capitalization

ABSTRACT

A computerized system with hardware and specialized software components for developing, executing and administering sale of securities for raising capital by an incubator financing company wherein a portion of the proceeds of the sale of securities is used temporarily to fund a subsequent company.

CROSS REFERENCE TO RELATED APPLICATION

This application claims the benefit of U.S. Provisional Application Ser.No. 63/235,121 filed Aug. 19, 2021, the contents of which areincorporated herein in their entirety.

FIELD OF THE DISCLOSURE

Systems and methods are disclosed which generally relate to raisingcapital.

BACKGROUND

The main barriers preventing an Initial Public Offering (IPO) to happenfor a company which is ready, willing and able to pursue it include thefollowing: the preparation cost of an IPO is prohibitive; there is noguarantee that the IPO will succeed; and bankers and other professionalsputting their career at stake will not authorize the IPO without properdue diligence ensuring financial securities markets' safety, validationof the business model; sufficient revenue making the company at leastcash-flow positive and if not profitable; strong and stable growth.

In other words, there must be no doubt that the company is on its roadto success.

Large corporations are able establish new businesses by self-funding newbusinesses from proceeds of more established businesses. Using theanalogy of a train, the financial power of a corporation relies onmomentum built on all businesses in an organization. The core company isthe locomotive, being well-established, with market credibility and cashflow due to its mature segments. Businesses within the corporatestructure are analogous to railway cars. Established businesses areclose to the locomotive, self-supportive, with positive cash flows andprofitability that can contribute resources to later less-establishedbusinesses. Using this model, the corporation can use the cash flow ofits best-performing segments to finance new businesses. New businessesadded by the corporation are funded by the revenues from the core andestablished segments of the company until they become profitablethemselves and can contribute positively to the corporation's revenue.Additionally, investors are more likely to invent in shares of thecorporation because of its proven track record of driving businesses tosuccess.

Small or start-up companies with a high profitability potential thatmerit investment banking services may not be able afford them due tocosts prior to the distribution of the securities, especially pertainingto the preparation and drafting of disclosures. Almost by definition, acompany seeking an IPO does not have sufficient revenue to support abusiness until it reaches profitability, nor does it have expertise incompleting regulatory and disclosure requirements. It is like a boxcaron a siding without a locomotive to pull it onto the mainline offinancial success.

Further, in addition to significant cost, it monopolizes a significantportion of the company's resources and the management's attention. Thatis why it is not uncommon that during the capitalization (e.g. IPO)process, the performance of the company is heavily impacted. Hence,there may be an additional need for funding, if only to offset the poorsales performance due to the effort of the capitalization or IPOprocess.

Therefore, it is desirable to develop new systems and methods forraising capital for small companies.

SUMMARY

One aspect of the disclosure provides a system for providing a cascadingfunding platform, the system comprising: a first processor configured todetermine a funding event, a second processor configured to determine aninitial public offering; a distributed ledger; a cascading fundingplatform operationally connected to the first processor, the secondprocessor and the distributed ledger, the cascading funding platformconfigured to receive, from the first processor, the funding event;generate, based on the funding event, a message related to an initialsubscriber offering to fund a first company; send the message to one ormore networked nodes associated with one or more subscribers of theplatform; receive bids to purchase funding tokens via the one or morenetworked nodes from the one or more subscribers in response to themessage; record bids for the funding tokens and respective allocatedtokens determined by a central processor to the distributed ledger,wherein the distributed ledger is accessible by the one or morenetworked nodes; receive from the second processor a first initialpublic offering for the first company; generate, based on the firstinitial public offering event, a message related to the first initialpublic offering; send the message to one or more networked nodesassociated with one or more owners of the funding tokens; wherein themessage comprises informing the one or more owners that a pro rata shareof the raised funds is payable after the first initial public offering,that a portion of the proceeds of the first initial public offering isto be held back to fund a subsequent initial public offering for asecond company and that a pro rata share of the raised funds is payableafter the subsequent initial public offering; generate a smart contractaccessible to the one or more networked nodes, wherein the smartcontract comprises a payout triggering event; and a plurality ofpredetermined electronic actions for generating a smart contract outputwhen the payout triggering event is met, wherein the smart contractgenerates a payout to the one or more owners automatically when thepayout event is triggered, and record execution of the smart contract tothe distributed ledger.

Embodiments of the system include the following, alone or in anycombination.

A first payout event is completion of the first initial public offering.The payout may be a pro rata share of the funds raised by the firstinitial public offering.

A second payout event is completion of the subsequent initial publicoffering. The payout may be a pro rata share of the funds raised by thesubsequent initial public offering.

The system further comprises one or more processors configured toexecute the program instructions to cause the computing system to:receive, from a plurality of networked nodes, a plurality of bids forone or more funding tokens from a plurality of investors, determine, bya central processor, a fractional share of the funding tokens toallocate to each of the plurality of investors based on the respectivebids associated with each investor; and allocate, by one or moreprocessors, the fractional shares of the funding tokens to each of theplurality of investors.

The smart contract is between an issuer of the funding tokens and aninvestor in the funding tokens.

The second processor determines the subsequent initial public offering.

The first processor configured to determine a funding event is remotefrom the cascading funding platform.

The second processor configured to determine an initial public offeringis remote from the cascading funding platform.

A second aspect provides for financing a first company and a secondcompany comprising establishing an incubator financial firm configuredto manage activities related to raising funds for the first company in afirst initial public offering and raising funds for the second companyin a subsequent initial public offering; defining an investor offeringto raise funds from investors for the first and second companies againsta pro rata share of the raised funds payable after the first initialpublic offering; holding back a portion of the proceeds of the firstinitial public offering to fund the subsequent initial public offeringagainst a pro rata share of the raised funds payable after thesubsequent initial public offering.

Embodiments of the method include the following, alone or in anycombination.

Paying investors a pro rata share of the funds raised by the firstinitial public offering.

Paying investors a pro rata share of the funds raised by the subsequentinitial public offering.

The method may further comprise defining an offering for sale ofinvestment shares in the first company; receiving bids from investorsfor purchase of the investment shares; accepting the bids frominvestors; tracking revenue associated with the sale of the investmentshares;

retaining a portion of revenue associated with the sale of theinvestment shares to fund an offering for sale of investment shares in asubsequent company; and paying parties a portion of the revenue fromsale of investment shares in the subsequent company as it is received.

The method may further comprise establishing a special purpose vehiclecompany that holds all assets of the first company and/or establishing aspecial purpose vehicle company that holds all assets of the secondcompany.

A portion of funds advanced by investors are returned to investors via apass-through security based on revenues from sale of equity shares inthe first initial public offering.

A portion of funds advanced by investors are returned to investors via apass-through security based on revenues from sale of equity shares inthe subsequent initial public offering.

Another aspect provides a distributed networked computer system formanaging cascading funding of a first company and a second company, thedistributed network computer system comprising a non-transitory computerreadable storage medium having program instructions embodied therewith;and one or more processors configured to execute the programinstructions to cause the computing system to receive, from a firstnetworked node, a first bid for one or more shares of the first companyfrom a first investor, wherein a portion of the revenue from sale of thefirst shares is used to fund activities related to funding the secondcompany; determine, by a central processor, a fractional share of thefirst company and a fractional share of the second company to allocateto the first investor based on the first bid; allocate, by one or moreprocessors, the fractional share of the first company and the secondcompany to the first user; a distributed ledger for recording bids forthe first company and respective allocated shares determined by thecentral processor, wherein the distributed ledger is accessible by thefirst networked node; and a smart contract accessible to the firstnetworked node, wherein the smart contract comprises a first and secondrevenue payout triggering event, wherein the first revenue payouttriggering event is completion of an initial public offering for thefirst company and the second revenue payout triggering event iscompletion of a subsequent initial public offering for the secondcompany; and a plurality of predetermined electronic actions forgenerating a smart contract output when the first and second revenuestream payout triggering event are met, wherein the smart contractgenerates a payout to the first investor automatically when the payoutevent is triggered; and wherein the execution of the smart contract isrecorded to the distributed ledger.

Embodiments of the distributed networked computer system include thefollowing alone or in any combination.

A first payout is a pro rata share of the proceeds of the first initialpublic offering and a second payout is a pro rata share of the proceedsof the subsequent initial public offering.

The distributed network may further comprise one or more processorsconfigured to execute the program instructions to cause the computingsystem to receive, from a plurality of networked nodes, a plurality ofbids for one or more shares of the first company from a plurality ofinvestors, determine, by a central processor, a fractional share of theone or more shares to allocate to each of the plurality of investorsbased on the respective bids associated with each investor; andallocate, by one or more processors, the fractional shares of the firstcompany to each of the plurality of investors.

The plurality of smart contracts are accessible to the plurality ofnetworked nodes, wherein each of the plurality of smart contractscomprises a first and second revenue payout triggering event, whereinthe first revenue payout triggering event is completion of an initialpublic offering for the first company and the second revenue payouttriggering event is completion of a subsequent initial public offeringfor the second company; and a plurality of predetermined electronicactions for generating a smart contract output when the first and secondrevenue stream payout triggering event are met, wherein the smartcontract generates a payout to the first investor automatically when thepayout event is triggered; and wherein the execution of the smartcontract is recorded to the distributed ledger.

Further aspects may include a non-transitory computer readable storagemedium comprising a plurality of computer readable instructions embodiedthereon wherein the instructions, when executed by a distributednetworked computer system for managing cascading funding of a firstcompany and a second company, cause the distributed networked computersystem to receive, from a first networked node, a first bid for one ormore shares of the first company from a first investor, wherein aportion of the revenue from sale of the first shares is used to fundactivities related to funding the second company; determine, by acentral processor, a fractional share of the first company and afractional share of the second company to allocate to the first investorbased on the first bid; allocate, by one or more processors, thefractional share of the first company and the second company to thefirst user; a distributed ledger for recording bids for the firstcompany and respective allocated shares determined by the centralprocessor, wherein the distributed ledger is accessible by the firstnetworked node; and a smart contract accessible to the first networkednode, wherein the smart contract comprises a first and second revenuepayout triggering event, wherein the first revenue payout triggeringevent is completion of an initial public offering for the first companyand the second revenue payout triggering event is completion of asubsequent initial public offering for the second company; and aplurality of predetermined electronic actions for generating a smartcontract output when the first and second revenue stream payouttriggering event are met, wherein the smart contract generates a payoutto the first investor automatically when the payout event is triggered;and wherein the execution of the smart contract is recorded to thedistributed ledger.

Further aspects may also provide a method for managing cascading fundingof a first company and a second company by a distributed networkedcomputer system, the method comprising receiving, from a first networkednode, a first bid for one or more shares of the first company from afirst investor, wherein a portion of the revenue from sale of the firstshares is used to fund activities related to funding the second company;determining, by a central processor, a fractional share of the firstcompany and a fractional share of the second company to allocate to thefirst investor based on the first bid; allocating, by one or moreprocessors, the fractional share of the first company and the secondcompany to the first user; recording to a distributed ledger bids forthe first company and respective allocated shares determined by thecentral processor, wherein the distributed ledger is accessible by thefirst networked node; and a smart contract accessible to the firstnetworked node, wherein the smart contract comprises a first and secondrevenue payout triggering event, wherein the first revenue payouttriggering event is completion of an initial public offering for thefirst company and the second revenue payout triggering event iscompletion of a subsequent initial public offering for the secondcompany; and a plurality of predetermined electronic actions forgenerating a smart contract output when the first and second revenuestream payout triggering event are met, wherein the smart contractgenerates a payout to the first investor automatically when the payoutevent is triggered; and recording the execution of the smart contract tothe distributed ledger.

BRIEF DESCRIPTION OF THE DRAWINGS

The disclosed aspects will hereinafter be described in conjunction withthe appended drawings, provided to illustrate and not to limit thedisclosed aspects, wherein like designations denote like elements.

FIG. 1A depicts a schematic chart of the difference between privatemarket valuation and public market valuation according to an exemplaryembodiment of the disclosed subject matter.

FIG. 1B depicts a schematic chart of cascading IPO incubators accordingto an exemplary embodiment of the disclosed subject matter.

FIG. 1C depicts a schematic chart of incubator and SPV firms related toa capitalization according to an exemplary embodiment of the disclosedsubject matter.

FIG. 2A and 2B depict schematic functional diagrams of a computer systemrelating to planning and developing securities, modeling and evaluatingalternatives, as well as executing and administering an offering forsale of securities according to an exemplary embodiment of the disclosedsubject matter.

FIG. 3 depicts a functional diagram of components of a computer systemaccording to an exemplary embodiment of the disclosed subject matter.

FIG. 4 shows a process flow diagram for defining, offering for sale andadministering a first tranche of securities related to cascading IPOsaccording to an embodiment of the disclosed subject matter.

FIG. 5 shows a process flow diagram for offering for sale of subsequenttranches of securities related to cascading IPOs according to anembodiment of the disclosed subject matter.

FIGS. 6A and 6B depict distributed networked systems for a cascadingfunding platform according to embodiments of the disclosed subjectmatter.

DETAILED DESCRIPTION OF THE DISCLOSED SUBJECT MATTER

In accordance with various embodiments of the invention, and as shown inthe figures, various systems and methods are disclosed which generallyprovide a platform for the creation, communication, price quotation, andexecution of trades for specified pools of securities.

The value creation of an IPO arises mainly from the difference ofvaluations between the private and public markets. The private marketvalues the assets. In this valuation model, there is no anticipation andeverything is based on the past, on the intrinsic value. For example asillustrated in FIG. 1A, a company that has a turnover of $1 million anda profit of $100,000 will be sold at approximately $1 million, lessduring a recession and more during a business boom. The public marketvalues the anticipation. It is based on the equivalent interest rate. Ina simplistic form, excluding risk factors, if the capital marketinterest rate is 2% and the company generates 10%, it will be valued bythe public market at least five times its price. Thus, the company witha $1 million turnover would be sold at about $7 million, i.e. takinginto account an anticipation on 15 years of turnover. The same company,with identical assets, may sell at about $5 million during recessionwith a 10 years anticipation, and perhaps $10 million if the market isbooming with a 20 years anticipation.

Recent changes in U.S. laws have facilitated the ability of a startup toparticipate in an IPO to raise capital. The Jumpstart Our BusinessStartups (JOBS) Act is a piece of U.S. legislation that was signed intolaw on Apr. 5, 2012, that loosens regulations instituted by theSecurities And Exchange Commission (SEC) on small businesses trying toraise investor funds. It lowers reporting and disclosure requirementsfor companies with less than $1 billion in revenue, and allowsadvertising of securities offerings. It greatly expands the number ofcompanies that can offer stock without going through SEC registration.

The JOBS Act is meant to make it easier for startups to raise capital.Secondarily, it is meant to allow retail investors to invest instartups. The JOBS Act established the category of “emerging growthcompanies,” which the SEC defines as a company that is issuing stockwith total annual gross revenues of less than $1 billion during its mostrecently completed fiscal year. The JOBS Act lessens reporting andoversight requirements for these companies. Before the JOBS Act, in mostcases, only accredited investors could invest in startups.

It greatly expanded a category under a rule called “Regulation A” (orReg A), which allows companies to offer stock without going through theprocess of registering with the SEC. Under the JOBS Act, the expandedReg A, often called Reg A+, allows companies to offer up to $50 millionin stock each year without needing to meet normal registrationrequirements. Retail investors can invest up to certain amounts,allowing them access to relatively risky capital investments.

Despite these improvements, barriers to a successful IPO remain. Forexample, all costs included for an IPO represent an average of 20% ofthe amount raised up to 35% for a startup raising a very large amount ofcapital These costs can seem high, but one needs to consider the size ofthe risk, especially when the company has no operating history.

In addition to significant cost, an IPO monopolizes a significantportion of the company's resources and the management's attention. It isalso very hard to define a timeline for preparation of an IPO. Reportingrequirements for an entity increase the older the entity is. Newstartups can require an indefinite amount of additional time to createnon-existent documents that are essential to the process. An IPO processusually lasts less than a year provided that there is no preliminaryprivate equity or mezzanine investment required and that the issuer canafford the IPO costs. A fast IPO process usually lasts less than sixmonths. These timelines do not include delays by the issuer or byauthorities to provide information, documents, decisions, financialstatements, third-parties opinions such as experts or lawyers that areneeded in the process. That is why it is not uncommon that during thecapitalization (e.g. IPO) process, the performance of the company isheavily impacted. Hence, there may be an additional need for funding, ifonly to offset the poor sales performance due to the effort of thecapitalization or IPO process.

Conventionally, funding for a small company such as a start-up companyis independent from funding for all other small companies. That meansthat each company requires a stand-alone funding regime, wherein thecapitalization process is repeated individually each time a companyseeks funding. As discussed above, the funding efforts can significantlydisrupt other activities related to a business and the specializedresources needed for the funding efforts are beyond the reach of manysmall companies without outside help.

An unconventional method for funding small companies using cascadingfunding is described herein. Cascading funding links funding for a firstcompany to funding for a second company, such that the funding of thefunding of the first company can be used to temporarily supportactivities relating to funding the second company. For example, if aportion of the valuation differential between the private market and thepublic market can be captured temporarily during an IPO, it could beused to finance one or more subsequent IPOs. It is appropriate todifferentiate, in the total cost of an IPO or other capitalization, thecosts that must be borne by the future company issuing shares beforetrading the IPO process, called “Upfront” or “Pre-Cash” (fees oflawyers, etc.), from those which will be supported at the end of the IPOby the raised funds, “Post-Cash” (commissions of Brokers or InvestmentBanks, etc.). It is also appropriate to “make whole” the portion of thevaluation differential from a first IPO that is to be used forsubsequent IPO's.

For example as shown in FIG. 1B, a company, Company 1, can beestablished to raise funds in an IPO. A portion of the funds raised inthe IPO for company 1 can be used to establish Companies 2, 3 and 4. Forexample, Company 1 may be established as a Reg A+ company and may issueup to $50 million of shares per year. The funds from the sale of theshares can be used to finance an initial IPO. A portion of the proceedsof the initial IPO can be used to establish one or more subsequent RegA+ companies (Companies 2, 3, and 4), each of which can issue up to $50million of shares in its first year and manage subsequent IPOs.Companies 2, 3 and 4 can in turn, spawn a third tier of Reg A+ companies(Companies 5 through 13). Provided that its revenues are less than $1billion per year and its age allows it to remain a Reg A+ company,Company 1 can issue another round of shares up to $50 million in thenext year. As the first or subsequent IPOs are capitalized by newinvestors, shareholders of the Companies are reimbursed for providingthe pre-IPO costs. The entity seeking funding during the IPO does notbear any costs during the IPO process, and the portion of the valuationdifferential captured for subsequent IPO's is accounted as an advancefrom the Company and deducted from the proceeds of the sale equityshares in the entity. Although this is described for the maximumallowance of share issued per year per company, this model can be usedfor S-1 (Traditional IPO), F-1 (Traditional IPO of a Foreign issuer),Reg-A or Reg A+ filings, or any combination of filing types forcompanies 1 through 13.

Preferably, Company 1 comprises a core team of experts in managing andexecuting IPOs, including legal teams, valuation teams, financial teamand management teams. The experts in Company 1 may also provide theirexpertise as a service function to Companies 2 through 13 to managetheir IPO's. The companies shown schematically in FIG. 1B can beconsidered as fundraising Incubators.

An equity securities issuer (“Issuer”) that cannot finance its IPO costsbut wants to go forward with an IPO will sign an agreement with eitheran IPO incubator or an IPO Sponsor or an IPO Investor or TransactionFunder (“Investor”) and have the expenses of its IPO paid directly bysaid Investor to Issuer's suppliers (lawyers, accountants, auditors,financial public relations etc.) up to a specified amount, in exampleUSD 10 million. To use the proceeds of said IPO, this credit limit maybe doubled, so USD 20 million will be added to the amount, disclosed inthe S-1, F-1 or Reg-A+ or any other prospectus and paid to the investorupon success of the IPO. Referring to FIG. 1B, Company 1 may be anIncubator company that is set up to organize an IPO for a first company.The extra credit limit in the prospectus can be used to fund an IPO fora second company, Company 2, which cannot finance its IPO costs. Thecosts of the IPO for Company 2 borrowed from the investors in Company 1can be reimbursed to the investors in Company 1 after the IPO forCompany 2. As discussed further below, investors in Company 1 can bereimbursed for funding the IPO for Company 2 in several ways, such as bya pass-through security payable after the IPO for Company 2 or by anequity position in Company 2.

As used herein, a fundraising Incubator is a company financing corporatetransactions such as an initial public offering (IPO) against an equityparticipation and a put option on this equity participation to theissuer itself. The put option, issued by the same issuer as the equityparticipation, ensures the investor that, in case of success of thetransaction, the investor can resell this participation to the issuerimmediately after.

The function of the Incubator is to manage aspects of the capitalizationprocess, while the management and structure of the entity seekingfunding can continue to manage aspects related to its normal corporateand entrepreneurial functions including development, production and saleof commercial products to consumers. Because the Incubator iscapitalized, organized and configured specifically for funding andmanaging an IPO, it removes the key barriers to a startup seeking anIPO, those of cost and expertise.

In some embodiments, separation of the entity's normal functions fromaspects related to the capitalization is accomplished by formation of aspecial purpose vehicle. As used herein, a special purpose vehicle (SPV)company is an industrial and commercial company that holds all assets ofthe company or group seeking IPO financing consolidated together. Assetsheld by the SPV are related to the commercial offerings of the companyor group and include for example, intellectual property and know-how,tangible assets including infrastructure, equipment, goods formanufacturing product(s), inventory of product(s) for sale etc., andhuman assets including employees in technical, marketing, sales etc.,and management personnel. Although this is not an absolute obligation,it is desirable for the future SPV issuer to remain financially,commercially and in every sense of the word credible in front of thefinancial market. This aspect should be studied case by case as part ofthe definition of the IPO or other offering. In some embodiments, when aknown group or entity has a subsidiary bearing all or part of its name,for example; BOUYGUES Telecom or PEUGEOT Leasing, the SPV may holdassets from the subsidiary while not holding assets within a parententity outside of the subsidiary.

As illustrated in FIG. 1C, an entity or company 100 seeking capitalfunding may set up or engage an Incubator company 110 to manage aspectsof the capitalization, including organizing information roadshows toexchange information with potential investors, prepare disclosures,define offerings to investors, conduct sale of securities, and managefinancials, including receiving payments for securities from investors130 and distributing payouts to parties including company 100 andinvestors wishing to exit the securities 140. The incubator company 110retains a portion of the income from the sale as payment for itsactivities. A special purpose vehicle (SPV) company 120 is also set upto hold tangible and intangible assets related to current businesses andmanage current operations. Company 100 retains control of the SPVcompany 120 through the financing process, such as by retaining aportion of shares in the SPV while the remainder of the shares in theSPV are sold to investors. The goal of these activities is an initialpublic offering. After the capitalization in the IPO is complete, theIncubator company 110 is dissolved or otherwise severed from company100.

As described above, a portion of the proceeds of the sale of the IPOsecurities is used to fund the pre-IPO costs. Investors providing thepre-IPO costs are compensated by a portion of the funds raised duringthe IPO share sales. Funding of the IPO costs may be obtained by sellinga series of tranches of securities related to IPO creation and sales.The first tranche may be sales of shares in the Incubator companyitself, which may occur prior to or during the matching of an Incubatorwith an entity seeking an IPO. The second tranche may be after theentity seeking funding is identified and the tranche comprises shares inthe SPV established during the IPO process targeted toward marketleaders to provide initial funding to the company and assure marketfollowers that the company will be successful. A third tranche maycomprise a pass-through security wherein the investor receives a portionof the proceeds of the sale of equity shares during the IPO. A fourthtranche may comprise a pass-through security wherein the investorreceives a portion of the proceeds of the sale of equity shares during asubsequent IPO organized by the Incubator. A pass-through security is adebt obligation that represents the cash flows towards a certain assetor liability. It simply passes future cash flows onto an investor. Afinal tranche comprises sale of equity shares in the SPV targeted towardmarket followers and retail investors. Each tranche provides a means ofexit for investors who want exit the company. When a new tranche issold, the investors who invested in a previous tranche that want or needto exit can sell some or all of their securities to new investors.

The process of organizing an IPO, or other capitalization vehiclecomprises the following steps.

An IPO Incubator Company, or “Incubator” is incorporated, for example inthe State of Delaware in the United States of America. It can be atraditional financial company that, depending on its structure, may ormay not be required to register with the Securities and ExchangeCommission (SEC) as a subject of the 1940 Investment Company Act.

A special vehicle (“SPV”) company is incorporated, such as in Delaware,USA. It is an industrial and commercial company wherein all assets ofthe company or group seeking IPO financing are consolidated together. Itcould be seen as a holding company; however, it is desirable to treatthe SPV as a fully operational entity and not a holding company, whichcan result in a significant devaluation when a listed company isperceived by the market as a “Holding”.

The Incubator's legal team prepares a “Regulation A+” disclosuredocument for the Incubator. Since this document is very similar from onetime to another, the cost of this operation should decreasesignificantly over time as the Incubator organizes more financingvehicles. This disclosure document states to the investor that Incubatoris an investment company that finances IPOs of any size, against a shareof the capital prior to the IPO and a pro rata share of the raised fundspayable after the IPO.

The Regulation A+ document offers the investor three ways out ofinvestment:

-   -   The investor can sell Incubator shares at the time of the IPO;        or    -   The investor can convert Incubator actions into SPV actions        after the Incubator IPO and before the start of the SPV IPO        process; or    -   Incubator buys back the investor's shares after (its) Incubator        IPO.

Incubator files with the Securities and Exchange Commission (SEC) forregistration and listing on a (US) stock market such as the NASDAQ orNew York Stock Exchange.

The SEC reviews the file and sends its comments, questions and possibleobjections to Incubator.

Meanwhile, the Incubator and the investment bank or investment banksyndicate that distributes the Incubator's shares are holding roadshowsto promote the stock on the market and to collect Incubator's share“orders”. During this period, legally, each market player is not allowedto buy the shares, but can only express interest and quantify the amounts/he is willing to invest. In practical terms, a buyer who expresses aninterest in a quantity of shares and then withdraws would lose anycredibility on the market and would be unable to continue trading inother IPOs.

A Roadshow is a presentation organized by an issuer of securities andthe syndicate of brokers and investment banks underwriting an issue ofsecurities, aiming at presenting to investors an opportunity ofinvestment.

It may take place in a hotel, a convention center, a bank or otherprestigious place under various circumstances such as a Private Offeringof equity or debt securities, an Initial Public Offering (IPO), aSecondary Public Offering or a Non Deal Presentation. In otherembodiments, the roadshow may be virtual, presented via electronic mediasuch as via the Internet or a limited access network (e.g. in awebcast). During the roadshow, the management of a company issuingsecurities or doing an Initial Public Offering (IPO) gives presentationsto analysts, fund managers, potential investors and their financialadvisors.

The roadshow is intended to generate excitement and interest in theissue or IPO, and is often critical to the success of the offering. Theroadshow may move across many locations that are scheduled in advanceand completed over a specific time period to inform and engage multiplepotential investors. Roadshows may be sometimes be limited to onecountry but usually include several international stops. Within theUnited States, some common destinations include New York City, Chicago,Los Angeles, Miami and Denver.

Roadshow events may attract hundreds of prospective buyers interested inlearning more about the offering. The events may include multimediapresentations and question-and-answer sessions with several of thecompany's officers present. Many companies take advantage of theinternet and post versions of road show presentations online. Inaddition to the larger road show events, companies may also holdsmaller, private meetings in the months and weeks preceding theoffering.

Roadshows cover a variety of topics including the company's history andfuture plans for growth. Information about the company's current assets,whether tangible or intangible, can be presented, as well as a salespitch regarding the upcoming offering.

Aside from providing information regarding the offering, the roadshowallows the company the opportunity to answer questions that may be posedby skeptics in the marketplace or during due diligence meetings. Itprovides a forum where the company can communicate directly withpotential stakeholders to address any potential concerns.

The underwriters also use information gathered from investors tocomplete the book-building process, which involves gathering pricespotential investors are willing to pay for the offering.

Once the road show activity is completed, the final prospectus iscreated and distributed to potential investors. This prospectus is alsofiled with the U.S. Securities and Exchange Commission (SEC).

An initial price for the offering is set based on the informationgathered during the book-building process, and the IPO date issolidified.

A non-deal roadshow occurs when executives hold discussions with currentand potential investors but nothing is offered for sale. A roadshowprovides an introduction of the offering to potential investors and wasconsidered a key non-financial factor in buying decisions made by 82% ofinstitutional investors in regards to IPOs in a 2014 study by Ernst &Young.

At the end of this process iteratively, the SEC gives the Incubator'slegal team the quotation authorization.

Incubator can therefore register with a US stock market, such as theNASDAQ. In the rare case of multiple listings, Incubator may alsoregister with foreign stock exchanges.

Incubator launches the IPO.

Once the funds are raised, in accordance with the use of the productstipulated by the Regulation A+ Disclosure Document, Incubator makes atleast the following payments:

-   -   A payment to the investment bank's account to pay the brokerage        commission if it has not been deducted before the funds were        sent to Incubator.    -   A payment to the SPV account to secure SPV funding.    -   Payment of SPV's IPO fees and expenses to the lawyers' account.    -   The payment of a success bonus on the account of the lawyers        according to the prescribed procedures.    -   The payment to the financier of the Incubator IPO.

SPV receives from Incubator the budget necessary to carry out its IPO.

SPV's legal team drafts a “Regulation 5-1” disclosure document for theSPV.

SPV's legal team prepares the SPV registration file with the SEC in FormS-1 and the due diligence file. This is much longer than the RegulationA+ form prepared for Incubator. It should be noted that the RegulationA+ form is a short form because it seeks a partial exemption fromregistration, while the S-1 form is a complete record including allsignificant transactions carried out by the issuer in the last five orten years, according to the case. The issuer cannot begin this fullregistration process until it has two full accounting years and a numberof financial conditions completed.

This document offers the investor three ways out of investment:

-   -   The Investor sells SPV shares at the time of the IPO; or    -   The SPV buys back the Investor's shares after Incubator's IPO;        or    -   Finally, the Investor does not wish to leave and remains a        shareholder of the SPV.

SPV files its prospectus with the SEC in order to be able to registerthere and obtain the listing of its shares on a US stock market.

The SEC reviews the SPV's file and sends its comments, questions andpossible objections to SPV.

Meanwhile, SPV and the investment bank or investment bank syndicate thatdistributes its shares organize roadshows to promote the security on themarket and to collect SPV's “orders” for shares. During this period,legally, each market player is not allowed to buy the shares, but canonly express interest and quantify the amount s/he is willing to invest.In practical terms, a buyer who expresses an interest in a quantity ofshares and then withdraws would lose any credibility on the market andwould be unable to continue trading other IPOs.

As shown in FIG. 2A, a computer system 200 is the core element of thesecurities architecture within the incubator company 110, receiving,generating, storing, integrating and coordinating data required fordefining the securities, receiving investment payments from a pluralityof investors 205, optionally generating smart contracts among investorsand the company, determining revenues related to the securities andadministering payouts to parties. The computer system is furtherprovided with at least one processor and into which is loaded softwarecomponents for receiving informational inputs from the plurality ofpotential investors via communications module or interface 210.

Block 210 represents a communication module, which manages inputs frominvestors and transmits outputs to the investors. Inputs from investorsinclude investing information, investor interest in the potentialoffering, investor identity, designation of a payment vehicle or digital“wallet”, such as a bank account, credit or debit account, includingcredit or debit cards issued by a financial institution, Venmo or PayPal® apps, etc. Communications module 210 may also be used byadministrator(s) 207 within the incubator company 110 of the computersystem to communicate with the system. Administrator(s) includerepresentatives of the legal, valuation, financial and management teamscharged with organizing and executing the IPO. Administrator(s) mayprovide inputs to the system to maintain and manage the system to makesure it is operating correctly. In embodiments, the administrator(s) 207may also provide information from the sellers (e.g. company 100),brokers, investment banks, underwriters, etc., risks assessments,projected revenue streams, etc.

In block 220, the system includes a securities planning module in whichthe securities are defined, as described in greater detail in regard toFIG. 2B.

Block 230 comprises the financial transactions module that managespayments from investors to cover their bids, payments to parties andcollection of transaction fees. In embodiments, once a bid is accepted,the financial transactions module may withdraw the bid amounts plustransaction fees from investors' payment vehicles in response toacceptance of bids by the computer system. Block 230 also disbursespayments to the parties based on the terms of the securities.

In embodiments, the securities may be offered in the form of a smartcontract, described in greater detail below. In block 240, the smartcontract module executes smart contracts by generating data blocksdefining the securities, including all terms and conditions binding onthe investors and the company such as purchase prices, percentages ofthe assets represented by the securities, etc.

Block 250 shows the securities administration module, which executes andadministers the securities.

As shown in FIG. 2B, block 220 comprises aspects of defining thesecurity offerings.

In block 221, planning the offering of securities includes establishingthe target amount of capital to be raised. Guided by inputs fromadministrator(s) of the system representing the seller, bank, broker,underwriter and/or other financial institutions, the system conductsfeasibility studies for offering securities to define the structure ofthe offering. Inputs may also include information from potentialinvestor gathered in roadshows, etc. The offering planning includesspecific variables to be included, ranges of acceptable values for eachvariable, and terms and conditions to be included in the offering.

In block 222, the system models and projects multiple values ofindividual variables and combinations of multiple sets of variables,such as time series projections and economic modeling of interactionbetween variables.

In block 223, the system evaluates alternatives by reviewing results ofmodeling and projections. Selecting one or more sets of variables thatmeet targets will be used to refine the structure and value of variablesand terms and conditions for price categories of the shares. Additionalmodeling and projections may be required to define a preferred set ofvalues for the variables and terms and conditions for inclusion in theoffering of securities in the price categories of the shares.

FIG. 2B also shows block 250 comprising aspects of administering thesecurity offerings.

In block 251, the system executes the offering of the securities. Theprice and content of the individual securities are established.Technical and legal details are finalized, required disclosures areprepared, and the securities are brought to market. The system receivesand accepts bids for shares in the security from at least one investor,tracks progress of sales of shares in the security, and closes saleswhen target values are met. The system may also receive sell orders fromholders of securities and sell them to new investors.

Block 251 may comprise an order creation module. In general, the ordercreation module may have two modes of functionality. In a first mode,the order creation module permits an investor to express interest inpre-offering activities and provide that information to the securities.In a second mode, the order creation module receives and processes bidsfrom investors after the offering is listed.

In block 252, the system administers the securities (shares) in theoffering. It maintains detailed and current records of individualinvestor accounts as required for periodic and cumulative payments, taxtreatment, benefits, reports and other purposes. It maintains requiredand useful records related to financial analysis and financial reportsof investors, brokers, and other involved parties.

In embodiments, the offering, sale and administration of the securitiesmay be conducted as a smart contract.

A smart contract is a computer application simulating the operation of acontract. It is a computer program or a transaction protocol which isintended to automatically execute, control or document legally relevantevents and actions according to the terms of a contract or an agreementbetween or among parties. The objectives of smart contracts are thereduction of need in trusted intermediators, arbitrations andenforcement costs, fraud losses, as well as the reduction of maliciousand accidental exceptions. The smart contract is stored on distributedledger such as a blockchain that runs when predetermined conditions aremet. Distributed ledger technology (DLT) is a digital system forrecording the transaction of assets in which the transactions and theirdetails are recorded in multiple places at the same time. Unliketraditional databases, distributed ledgers have no central data store oradministration functionality. They may be used to automate the executionof an agreement so that all participants can be immediately certain ofthe outcome, without any intermediary's involvement or time loss.

The reliability of the smart contract comes from its automaticity whichgives it a power of execution unmatched to date.

A smart contract also can be regarded as a secured stored procedure asits execution and codified effects like the transfer of some valuebetween parties are strictly enforced and cannot be manipulated, after atransaction with specific contract details is stored into a blockchainor distributed ledger. That is because the actual execution of contractsis controlled and audited by the platform, not by any arbitraryserver-side programs connecting to the platform. Smart contracts areparticularly useful for managing exchanges of virtual financial or valueassets, where no tangible materials need to be moved.

Blockchain is a distributed ledger technology that enables a set ofpeers to work together to create a unified, decentralized network. Thepeers can communicate and share information or data with the help of aconsensus algorithm. There is no need for a centralized authority, whichmakes the whole network trustworthy when compared to other networks.When one peer sends information to another, a transaction is generatedin the form of a “block”. Blocks are used to store transactions andother important information that is required to operate the blockchainsuccessfully. When this happens, the transactions need to be validatedusing the consensus algorithm. Proof of Work is used to validate thework. It ensures that no invalid transactions are passed into theblockchain. Timestamps are created to ensure that each transaction canbe traced, backed, and verified by anyone. The blockchain providestransparency, immutability, and security.

The smart contract preferably is structured to adhere to the basic rulesof prudence in a transaction financing investment including thefollowing:

Having a commitment from both parties to the transaction provides thesafest conditions to the investment. Commonly, a transaction financingagreement is entered into between one party to the transaction and therepresentative of the investors.

Reduce the time of the investment to the minimum. This rather simplerule has lots of implications, from logistics to legal conditions.Representatives of the investors, who are desirably financiers orbusinessmen but not attorneys-at-law, can pool investor funds into anaccount under the representatives' control and verify the parties'consents and willingness to proceed.

Have all the transaction (key) terms agreed upon before the financingtakes place. The investor or his representative must ascertain that theparties are in full agreement on all (key) terms of the transaction.While the parties might not be able to bear the cost of all agreementsdrafting before the transaction financing takes place, they can surelyproduce a complete term sheet for each agreement needed for thetransaction. Any party receiving the transaction financing can also takethe commitment toward the investor that no other additional or new (key)term shall be required from the other party after the financing takesplace, preventing thereby the classic last minute requirement that makesthe transaction fail.

The contracting parties program the contractual terms, payments to bemade and all dispatches of documents used for the execution of thecontract in the software application and may no longer retract theircommitments. Once launched, the application performs the scheduledoperations without human intervention, as scheduled.

End clients interact with a smart contract through transactions. Suchtransactions with a smart contract can invoke other smart contracts.These transactions might result in changing the state and sendingfinancial assets from one smart contract to another or from one accountto another. Financial assets can include nationally denominatedcurrencies, cryptocurrencies, virtual stock certificates, or otherassets whose value can be defined digitally.

Similar to a transfer of value on a blockchain, deployment of a smartcontract on a blockchain occurs by sending a transaction from a walletfor the blockchain. The transaction includes the compiled code for thesmart contract as well as a special receiver address. That transactionmust then be included in a block that is added to the blockchain, atwhich point the smart contract's code will execute to establish theinitial state of the smart contract. Byzantine fault-tolerant algorithmssecure the smart contract in a decentralized way from attempts to tamperwith it. Once a smart contract is deployed, it cannot be updated. Smartcontracts on a blockchain can store arbitrary state and executearbitrary computations.

The reliability of the intelligent contract can be greatly increased byrelying on a decentralized IT environment allowing secure access to thecontractors and unfalsifiable by them.

Each smart contract may include information about the investment in thesecurity. Such information may include the amount of the investment, theagreed-upon payouts, the revenue stream, the time the investment isagreed upon, the identities of the parties, etc. Investment informationmay further include conditional outcomes based upon each potentialoutcome, including the facilitation of payment from the investor to theseller, and/or the return of funds in event of a void or cancellation.In some embodiments, a settlement service may be agreed upon between theparties.

Some embodiments provide that the smart contracts may be generated onindividual PC's, on a mobile device and/or in the cloud. Such examplesare non-limiting as the smart contracts may be generated at a variety ofother devices and/or types thereof. In some embodiments, each smartcontract may involve external services at the discretion of the parties.In some embodiments, a range of options may be selected by the partiesat the time the smart contract is generated.

Some embodiments provide that a smart contract may be registered with asettlement service provider that is agreed to by the parties. In someembodiments, a settlement service may provide information about theoutcome of the assets on which the security is based. In someembodiments, the settlement service may send the information to thecounterparties, which may trigger the payouts under the terms of thesmart contract. For example, the settlement service provider mayinitiate a bank transfer from the buyer to the seller based on the smartcontract. In some embodiments, the process may be automated by softwareon a computer and/or server controlled by the settlement service.Embodiments herein do not require the funds to be held in any kind ofescrow, however, such option is contemplated by this disclosure. Forexample, embodiments herein are directed to any financial settlementprocess that may be used in conjunction with the smart contracts asdisclosed herein.

Some embodiments provide that the settlement transaction may be storedin blockchain to close the contract. In some embodiments, detailscorresponding to the settlement transaction may be retained forauditing, later scrutiny and/or to ensure that no errors are made.

FIG. 3 depicts a computer system 300 according to an embodiment of thepresent disclosure. In general, the computer system 300 may include acomputing device 310, such as a special-purpose computer designed andimplemented for receiving user inputs, determining and directing andcontrolling the output of signals. The computing device 310 may be orinclude data sources, client devices, and so forth. In certain aspects,the computing device 310 may be implemented using hardware or acombination of software and hardware. The computing device 310 may be astandalone device, a device integrated into another entity or device, aplatform distributed across multiple entities, or a virtualized deviceexecuting in a virtualization environment.

The computing device 310 may communicate across a network 302. Thenetwork 302 may include any data network(s) or internetwork(s) suitablefor communicating data and control information among participants in thecomputer system 300. This may include public networks such as theInternet, private networks, and telecommunications networks such as thePublic Switched Telephone Network or cellular networks using cellulartechnology and/or other technologies, as well as any of a variety otherlocal area networks or enterprise networks, along with any switches,routers, hubs, gateways, and the like that might be used to carry dataamong participants in the computer system 300. The network 302 may alsoinclude a combination of data networks and need not be limited to astrictly public or private network.

The computing device 310 may communicate with an external device 304.The external device 304 may be any computer, mobile device such as acell phone, tablet, smart watch or other remote resource that connectsto the computing device 310 through the network 302. This may includeany of the servers or data sources described herein, including servers,content providers, databases or other sources for shot information to beused by the devices as described herein.

In general, the computing device 310 may include a controller orprocessor 312, a memory 314, a network interface 316, a data store 318,and one or more input/output interfaces 320. The computing device 310may further include or be in communication with peripherals 322 andother external input/output devices that might connect to theinput/output interfaces 320.

The controller 312 may be implemented in software, hardware or acombination of software and hardware. According to one aspect, thecontroller 312 may be implemented in application software running on acomputer platform. Alternatively, the controller 312 may include aprocessor or other processing circuitry capable of processinginstructions for execution within the computing device 310 or computersystem 300. The controller 312, as hardware, may include asingle-threaded processor, a multi-threaded processor, a multi-coreprocessor and so forth. The controller 312 may be capable of processinginstructions stored in the memory 314 or the data store 318.

The memory 314 may store information within the computing device 310.The memory 314 may include any volatile or non-volatile memory or othercomputer-readable medium, including without limitation a Random-AccessMemory (RAM), a flash memory, a Read Only Memory (ROM), a ProgrammableRead-only Memory (PROM), an Erasable PROM (EPROM), registers, and soforth. The memory 314 may store program instructions, program data,executables, and other software and data useful for controllingoperation of the computing device 310 and configuring the computingdevice 310 to perform functions for a user 330. The memory 314 mayinclude a number of different stages and types of memory for differentaspects of operation of the computing device 310. For example, aprocessor may include on-board memory and/or cache for faster access tocertain data or instructions, and a separate, main memory or the likemay be included to expand memory capacity as desired. All such memorytypes may be a part of the memory 314 as contemplated herein.

The memory 314 may, in general, include a non-volatile computer readablemedium containing computer code that, when executed by the computingdevice 310 creates an execution environment for a computer program inquestion, e.g., code that constitutes processor firmware, a protocolstack, a database management system, an operating system, or acombination of the foregoing, and that performs some or all of the stepsset forth in the various flow charts and other algorithmic descriptionsset forth herein. While a single memory 314 is depicted, it will beunderstood that any number of memories may be usefully incorporated intothe computing device 310.

The network interface 316 may include any hardware and/or software forconnecting the computing device 310 in a communicating relationship withother resources through the network 302. This may include remoteresources accessible through the Internet, as well as local resourcesavailable using short range communications protocols using, e.g.,physical connections (e.g., Ethernet), radio frequency communications(e.g., Wi-Fi, Bluetooth), optical communications (e.g., fiber optics,infrared, or the like), ultrasonic communications, or any combination ofthese or other media that might be used to carry data between thecomputing device 310 and other devices. The network interface 316 may,for example, include a router, a modem, a network card, an infraredtransceiver, a radio frequency (RF) transceiver for receiving AM/FM orsatellite radio sources, a near field communications interface, aradio-frequency identification (RFID) tag reader, or any other datareading or writing resource or the like.

The network interface 316 may include any combination of hardware andsoftware suitable for coupling the components of the computing device310 to other computing or communications resources. By way of exampleand not limitation, this may include electronics for a wired or wirelessEthernet connection operating according to the IEEE 802.11 standard (orany variation thereof), or any other short or long range wirelessnetworking components or the like. This may include hardware for shortrange data communications such as Bluetooth or an infrared transceiver,which may be used to couple to other local devices, or to connect to alocal area network or the like that is in turn coupled to a data network302 such as the Internet. This may also include hardware/software for aWiMax connection or a cellular network connection (using, e.g., CDMA,GSM, LTE, or any other suitable protocol or combination of protocols).The network interface 316 may be included as part of the input/outputdevices 320 or vice-versa.

The data store 318 may be any internal or external memory storeproviding a computer-readable medium such as a disk drive, an opticaldrive, a magnetic drive, a flash drive, or other device capable ofproviding mass storage for the computing device 310. The data store 318may store computer readable instructions, data structures, programmodules, and other data for the computing device 310 or computer system300 in a non-volatile form for relatively long-term, persistent storageand subsequent retrieval and use. For example, the data store 318 maystore an operating system, application programs, program data,databases, files, and other program modules or other software objectsand the like.

As used herein, processor, microprocessor, and/or digital processor mayinclude any type of digital processing device such as, withoutlimitation, digital signal processors (“DSPs”), reduced instruction setcomputers (“RISC”), complex instruction set computers (“CISC”)processors, microprocessors, gate arrays (e.g., field programmable gatearrays (“FPGAs”)), programmable logic device (“PLDs”), reconfigurablecomputer fabrics (“RCFs”), array processors, secure microprocessors, andapplication-specific integrated circuits (“ASICs”). Such digitalprocessors may be contained on a single unitary integrated circuit dieor distributed across multiple components.

As used herein, computer program and/or software may include anysequence or human or machine cognizable steps which perform a function.Such computer program and/or software may be rendered in any programminglanguage or environment including, for example, C/C++, C#, Fortran,COBOL, MATLAB™, PASCAL, GO, RUST, SCALA, Python, assembly language,markup languages (e.g., HTML, SGML, XML, VoXML), and the like, as wellas object-oriented environments such as the Common Object Request BrokerArchitecture (“CORBA”), JAVA™ (including J2ME, Java Beans, etc.), BinaryRuntime Environment (e.g., “BREW”), and the like.

The input/output interface 320 may support input from and output toother devices that might couple to the computing device 310. This may,for example, include serial ports (e.g., RS-232 ports), universal serialbus (USB) ports, optical ports, Ethernet ports, telephone ports, audiojacks, component audio/video inputs, HDMI ports, and so forth, any ofwhich might be used to form wired connections to other local devices.This may also include an infrared interface, RF interface, magnetic cardreader, or other input/output system for wirelessly coupling in acommunicating relationship with other local devices. It will beunderstood that, while the network interface 316 for networkcommunications is described separately from the input/output interface320 for local device communications, these two interfaces may be thesame, or may share functionality, such as where a USB port 370 is usedto attach to a Wi-Fi accessory, or where an Ethernet connection is usedto couple to a local network attached storage. The input/outputinterface 320 may further output signals to displays of peripheraldevices, as described herein.

As used herein, a user 330 is any human that interacts with the computersystem 300. In this context, a user may be generally classed within oneof two categories. One category is an administrator of the system,representing the seller and/or financial institution organizing andconducting the offering of the security. Another category is an investorwho buys and sells shares in the security.

In certain embodiments the I/O interface 320 facilitates communicationwith input and output devices for interacting with a user. For example,the I/O interface may communicate with one or more devices such as auser-input device and/or a display 350 which may be instantiated on thedevice described herein or on a separate device such as a mobile device208, which enable a user to interact directly with the controller 312via bus 332. The user-input device may comprise one or morepush-buttons, a touch screen, or other devices that allows a user toinput information. In these embodiments, the computer system may furthercomprise a display to provide visual output to the user. The display maycomprise any of a variety of visual displays, such as a viewable screen,a set of viewable symbols or numbers, and so on. One can appreciate thatthe inputs and outputs of the computer system would be different foradministrators and investors. Accordingly, the computing device 310 maycommunicate with administrators and investors with different interfaces324 and 328.

A peripheral 322 may include any device used to provide information toor receive information from the computing device 310. This may includehuman input/output (I/O) devices such as a keyboard, a mouse, a mousepad, a track ball, a joystick, a microphone, a foot pedal, a camera, atouch screen, a scanner, or other device that might be employed by theuser 330 to provide input to the computing device 310. This may also orinstead include a display, a printer, a projector, a headset or anyother audiovisual device for presenting information to a user. Theperipheral 322 may also or instead include a digital signal processingdevice, an actuator, or other device to support control of orcommunication with other devices or components. In one aspect, theperipheral 322 may serve as the network interface 316, such as with aUSB device configured to provide communications via short range (e.g.,Bluetooth, Wi-Fi, Infrared, RF, or the like) or long range (e.g.,cellular data or WiMax) communications protocols. In another aspect, theperipheral 322 may augment operation of the computing device 310 withadditional functions or features, or other device. In another aspect,the peripheral 322 may include a storage device such as a flash card,USB drive, or other solid-state device, or an optical drive, a magneticdrive, a disk drive, or other device or combination of devices suitablefor bulk storage. More generally, any device or combination of devicessuitable for use with the computing device 310 may be used as aperipheral 322 as contemplated herein.

Other hardware 326 may be incorporated into the computing device 310such as a co-processor, a digital signal processing system, a mathco-processor, a graphics engine, a video driver, a camera, a microphone,additional speakers, and so forth. The other hardware 326 may also orinstead include expanded input/output ports, extra memory, additionaldrives, and so forth.

A bus 332 or combination of busses may serve as an electromechanicalbackbone for interconnecting components of the computing device 310 suchas the controller 312, memory 314, network interface 316, other hardware326, data store 318, and input/output interface. As shown in the figure,each of the components of the computing device 310 may be interconnectedusing a system bus 332 in a communicating relationship for sharingcontrols, commands, data, power, and so forth.

The computing device 310 is connected to a power source 360 to provideelectrical power for the computing device to run.

The various illustrative logical blocks, modules and circuits describedin connection with the present disclosure may be implemented orperformed with a processor specially configured to perform the functionsdiscussed in the present disclosure. The processor may be a neuralnetwork processor, a digital signal processor (DSP), an applicationspecific integrated circuit (ASIC), a field programmable gate arraysignal (FPGA) or other programmable logic device (PLD), discrete gate ortransistor logic, discrete hardware components or any combinationthereof designed to perform the functions described herein.Alternatively, the processing system may comprise one or moreneuromorphic processors for implementing the neuron models and models ofneural systems described herein. The processor may be a microprocessor,controller, microcontroller, or state machine specially configured asdescribed herein. A processor may also be implemented as a combinationof computing devices, e.g., a combination of a DSP and a microprocessor,a plurality of microprocessors, one or more microprocessors inconjunction with a DSP core, or such other special configuration, asdescribed herein.

The steps of a method or algorithm described in connection with thepresent disclosure may be embodied directly in hardware, in a softwaremodule executed by a processor, or in a combination of the two. Asoftware module may reside in storage or machine readable medium,including random access memory (RAM), read only memory (ROM), flashmemory, erasable programmable read-only memory (EPROM), electricallyerasable programmable read-only memory (EEPROM), registers, a hard disk,a removable disk, a CD-ROM or other optical disk storage, magnetic diskstorage or other magnetic storage devices, or any other medium that canbe used to carry or store desired program code in the form ofinstructions or data structures and that can be accessed by a computer.A software module may comprise a single instruction, or manyinstructions, and may be distributed over several different codesegments, among different programs, and across multiple storage media. Astorage medium may be coupled to a processor such that the processor canread information from, and write information to, the storage medium. Inthe alternative, the storage medium may be integral to the processor.

The methods disclosed herein comprise one or more steps or actions forachieving the described method. The method steps and/or actions may beinterchanged with one another without departing from the scope of theclaims. In other words, unless a specific order of steps or actions isspecified, the order and/or use of specific steps and/or actions may bemodified without departing from the scope of the claims.

The functions described may be implemented in hardware, software,firmware, or any combination thereof. If implemented in hardware, anexample hardware configuration may comprise a processing system in adevice. The processing system may be implemented with a busarchitecture. The bus may include any number of interconnecting busesand bridges depending on the specific application of the processingsystem and the overall design constraints. The bus may link togethervarious circuits including a processor, machine-readable media, and abus interface. The bus interface may be used to connect a networkadapter, among other things, to the processing system via the bus. Thenetwork adapter may be used to implement signal processing functions.For certain aspects, a user interface (e.g., keypad, display, mouse,joystick, etc.) may also be connected to the bus. The bus may also linkvarious other circuits such as timing sources, peripherals, voltageregulators, power management circuits, and the like, which are wellknown in the art, and therefore, will not be described any further.

The processor may be responsible for managing the bus and processing,including the execution of software stored on the machine-readablemedia. Software shall be construed to mean instructions, data, or anycombination thereof, whether referred to as software, firmware,middleware, microcode, hardware description language, or otherwise.

In a hardware implementation, the machine-readable media may be part ofthe processing system separate from the processor. However, as thoseskilled in the art will readily appreciate, the machine-readable media,or any portion thereof, may be external to the processing system. By wayof example, the machine-readable media may include a transmission line,a carrier wave modulated by data, and/or a computer product separatefrom the device, all which may be accessed by the processor through thebus interface. Alternatively, or in addition, the machine-readablemedia, or any portion thereof, may be integrated into the processor,such as the case may be with cache and/or specialized register files.Although the various components discussed may be described as having aspecific location, such as a local component, they may also beconfigured in various ways, such as certain components being configuredas part of a distributed computing system.

The machine-readable media may comprise a number of software modules.The software modules may include a transmission module and a receivingmodule. Each software module may reside in a single storage device or bedistributed across multiple storage devices. By way of example, asoftware module may be loaded into RAM from a hard drive when atriggering event occurs. During execution of the software module, theprocessor may load some of the instructions into cache to increaseaccess speed. One or more cache lines may then be loaded into a specialpurpose register file for execution by the processor. When referring tothe functionality of a software module below, it will be understood thatsuch functionality is implemented by the processor when executinginstructions from that software module. Furthermore, it should beappreciated that aspects of the present disclosure result inimprovements to the functioning of the processor, computer, machine, orother system implementing such aspects.

If implemented in software, the functions may be stored or transmittedover as one or more instructions or code on a computer-readable medium.Computer-readable media include both computer storage media andcommunication media including any storage medium that facilitatestransfer of a computer program from one place to another.

Further, it should be appreciated that modules and/or other appropriatemeans for performing the methods and techniques described herein can bedownloaded and/or otherwise obtained by a user terminal and/or basestation as applicable. For example, such a device can be coupled to aserver to facilitate the transfer of means for performing the methodsdescribed herein. Alternatively, various methods described herein can beprovided via storage means, such that a user terminal and/or basestation can obtain the various methods upon coupling or providing thestorage means to the device. Moreover, any other suitable technique forproviding the methods and techniques described herein to a device can beutilized.

The computer program controls input and operation of the device. Thecomputer program includes at least one code segment stored in or on acomputer-readable medium residing on or accessible by the device forinstructing the computing elements, and any other related components tooperate in the manner described herein. The computer program ispreferably stored within the memory and comprises an ordered listing ofexecutable instructions for implementing logical functions in thedevice. However, the computer program may comprise programs and methodsfor implementing functions in the device that are not an orderedlisting, such as hard-wired electronic components, programmable logicsuch as field-programmable gate arrays (FPGAs), application specificintegrated circuits, or other similar or conventional methods forcontrolling the operation of electrical or other computing devices.

Similarly, the computer program may be embodied in any computer-readablemedium for use by or in connection with an instruction execution system,apparatus, or device, such as a computer-based system,processor-containing system, or other system that can fetch theinstructions from the instruction execution system, apparatus, ordevice, and execute the instructions. The computer-readable medium mayeven be paper or another suitable medium upon which the program isprinted, as the program can be electronically captured, via forinstance, optical scanning of the paper or other medium, then compiled,interpreted, or otherwise processed in a suitable manner, if necessary,and then stored in a computer memory.

FIG. 4 shows a process flow diagram 400 for defining and offeringsecurities for sale by the incubator company 110 according to anembodiment of the disclosed subject matter. As used herein, the firsttranche may be sale of shares in the first company to investors. Asdiscussed herein a portion of the proceeds of the sale of the firsttranche may be held back to temporarily fund activities related tofunding for a second company.

The process flow diagram 400 starts at block 402 wherein the computersystem receives inputs from administrator(s) representing the seller(e.g. company 100 and incubator 110) regarding a capitalization effortsuch as an IPO to be offered as described herein. Inputs include atarget amount of capital to be raised, information regarding company100's current and potential valuation, etc.

The computer system determines a structure for the security in block404. The determination of the structure comprises conducting activitiesin blocks 221, 222 and 223 of FIG. 2B. It is to be appreciated thatdefining the structure of the offering in block 404 may comprise severaliterative interactions between the computer system and administrator(s)or seller(s) to define the final structure of the security (arrow 404a).

Once the structure of the offering is determined, the computer systemmoves to executing the offering (block 251 of FIG. 2B) by moving toblock 406. Block 406 comprises offering the security for sale topotential investors. Block 408 comprises receiving “bids” for securitiesfrom investors. As discussed above, in some embodiments, a “bid” maycomprise a potential buyer expressing interest in purchasing shares ofthe security in response to pre-sale information disclosures provided bythe seller and/or incubator, such as in roadshows, or queries about thesecurity which is not currently offered for sale. In embodiments whereinan investor expresses interest or initiates a query, the expressedinterest or query is directed by the system from the investor into block404 of the process flow scheme (arrow 408 a) for analysis and responsefrom the seller(s). It is to be appreciated that defining the structureof the security in block 404 based on buyer-initiated inputs maycomprise several iterative interactions among the computer system,administrator(s) or seller(s) and investors (arrows 404 a and 408 a) todefine the final structure of the security. “Bids” also refers to offersto purchase shares of the security by one or more investors after thefinal structure of the security is defined.

Once the final structure of the offering is determined, the computersystem moves to executing the offering (block 240 of FIG. 2 ) by movingto block 406. Block 406 comprises offering the first tranche ofsecurities in the first price category for sale to potential investors.Block 408 comprises receiving bids for securities from investors. Block410 comprises accepting the bids from investors. Accepting the bidsincludes issuing securities to the investors at their bid price(s) andholding them in the computer system. As described above, acceptance ofthe bids by sellers may comprise generation of a smart contract thatdefines the final terms and conditions of the security, includingpayouts and triggering events.

The system tracks the sales of securities in block 412, including thetotal number of securities sold and the prices offered in bids andaccepted by the computer system and the holders of the securities usinga distributed ledger such as a blockchain. As the computer system tracksshare sales it determines whether targets of the first tranche have beenmet in block 414. Targets may include securities in the first tranchebeing sold out, bid prices reaching a target price related to theoffering price of the second tranche, target funding raised, time periodfor offering the first tranche expiring, or any combination thereof. Ifthe target(s) are not reached, the computer system moves to block 416 tocontinue offering securities in the first offering, returning to block408 and receiving more bids from investors.

If the computer system determines that the target(s) are reached inblock 414, the computer system moves to block 418 and closes the firsttranche. After closing the first tranche, the computer system moves toblock 420 to make payments to parties depending on the terms of thesecurities and then moves to block 500 to open and offer a second(subsequent) tranche. Second and subsequent tranches may relate tofunding second and subsequent companies following initial funding of thefirst company.

The system and methods described herein may be used for privateofferings, initial public offerings or combinations thereof. Forexample, securities may be offered to a limited number of privatecapital entities. It is to be appreciated that the terms and conditionsof the cascading funding securities are defined in a smart contract, sodifferent smart contracts can be negotiated by different investors. Forexample, in a private offering each private capital entity may be ableto negotiate terms and conditions separately from other private capitalentities. In other examples, investors such as preferred investors,angel investors, accredited investors or investors willing and able toinvest larger sums may obtain better terms than smaller investors. Forexample, such investors may be able to negotiate with the seller todefine terms and conditions for a smart contract, while smallerinvestors may be limited to purchasing a security where the terms andconditions for a payout are non-negotiable. Further, since the goal ofthe cascading funding system described herein is a first initial publicoffering for a first company and a subsequent initial public offeringfor a second company, investments in the first and second companies mayinvolve public investors.

FIG. 5 shows a process flow diagram for offering for sale of subsequenttranches of an IPO offering comprising more than one tranche. FIG. 5shows the process 500 for opening and offering for sale of the secondtranche and any other subsequent tranches.

In block 502, the computer system announces the opening of the second orsubsequent tranches, which includes announcing the terms and conditionsof the tranche and setting the opening asking price of the tranche. Inblock 504, the computer system receives sell orders for securitiesbought in the prior tranches from owners of securities wishing to sellsecurities. When the subsequent tranche is the second tranche the firsttranche is the prior tranche. When the subsequent tranche is the thirdtranche, the first tranche and the second tranche are the priortranches, etc. In block 506, the computer system adds the securitiesdesignated in the sell orders in block 504 to the subsequent tranche forsale to new investors, or pays the sellers the exit price, depending onthe terms and conditions of the securities. New investors may includeinvestors who had not participated in the prior tranche and/or investorsin the prior tranche who wish to increase or modify their holdings. Inblock 510, the computer system receives bids for securities frominvestors. Bids can be made for the securities from the prior tranche orfrom the current tranche. Block 512 comprises accepting the bids frominvestors. Bids for securities from prior tranches are accepted first,then bids for securities from the current tranche. Accepting the bidsincludes issuing securities to the investors at their bid price(s) andholding them in the computer system.

The system tracks the sales of securities in block 514, including thetotal number of securities sold and the prices offered in bids andaccepted by the computer system. As the computer system tracks sharesales it determines whether targets of the current tranche have been metin block 516. Targets may include securities in the prior and currenttranche(s) being sold out, bid prices reaching a target price related tothe offering price of a subsequent tranche, target funding raised, timeperiod for offering the current tranche expiring, or any combinationthereof. If the target(s) are not reached, the computer system moves toblock 518 to continue offering securities in the tranche, returning toblock 510 and receiving more bids from investors.

If the computer system determines that the target(s) are reached inblock 516, the computer system moves to block 520 and closes the currenttranche. After closing the current tranche, the computer system moves toblock 522 to make payments to parties depending on the terms of thesecurities. Also after closing the current tranche, the computer systemmoves to block 524 to open and offer a subsequent tranche by returningto block 502 to announce opening of the subsequent tranche. The processof opening and closing tranches summarized in process flow 500 iscontinued until all securities in all planned tranches are sold toinvestors. When all securities are sold, the computer system will endthe process in block 522.

While the final tranche may be closed, the computer system may continueadministering securities for the investors, allowing them to buy andsell securities within the system. If it is desirable to raiseadditional capital for the company, the process flow may return to block402 for the computer system to define a new tranche or tranches to beoffered.

FIGS. 6A and 6B are schematic diagrams illustrating example embodimentsof a system comprising nodes and users that may be involved in a smartsystem for cascading funding utilizing one or more smart contracts on adistributed ledger technology platform. A node is a connection point ina communications network and allow users to interact with the network.Each node is an endpoint for data transmissions or redistribution. Nodeshave either a programmed or engineered capability to recognize, processand forward transmissions to other network nodes As illustrated in FIG.6A, in some embodiments, a smart cascading funding platform 600 cancomprise one or more registered agent (RA) or dealer nodes 602, one ormore investor nodes 604, one or more asset owner (seller) nodes 606,and/or a central authority node 608, which can be in communication withone another through a network 610. The investor nodes 604 may be used byusers (investors) subscribing to the platform to find and invest incompanies of interest to the investor. The owner (seller) nodes 606comprise the first and second companies seeking funding and/or specialpurpose vehicle companies holding assets of the first and secondcompanies. The central authority node 608 is held by the issuer of theshares, such as an Incubator Company. In some embodiments, one or moreof the RA node(s) 602, investor node(s) 604, asset owner node(s) 606,and central authority node 608, such as a node controlled by theIncubator Company, can comprise a DLT platform 612 on which the smartcascading platform, one or more smart contracts and smart contractoutputs thereof, and/or one or more private data sharing channels may beimplemented. In some embodiments, the DLT platform 612 can be configuredto facilitate the filing, tracking, management, communications,notifications, or the like of the smart platform as described herein. Insome embodiments, the system 600 may also include an external system 618as described below with regard to FIG. 6B.

As illustrated in FIG. 6B, in some embodiments of a cascading fundingplatform 805, one or more investor systems 614 may not comprise a DLTplatform. Rather, the one or more investor systems 614 can be configuredto communicate with one or more RA nodes 602 comprising a DLT platform612 through a separate network 616, for example through an applicationprogramming interface (“API”). As such, in some embodiments, one or moreinvestor systems 614 may not be on the DLT itself. For example, smallinvestors may be able to purchase securities from a registered agent ordealer in the distributed network, who is authorized to negotiate termsand conditions of the smart contracts on behalf of small investors. TheRA may negotiate the terms and conditions prior to or after engagingwith investors not on the DLT itself. Further, in some embodiments, acentral authority node 808 can be configured to maintain a separateexternal system 618. In some embodiments, the separate external system618 can be in communication with the central authority node 608 througha separate network connection 620, such as an API, for example forpurposes of maintaining legally valid versions of the cascading fundingfilings. In some embodiments, the smart filings on the DLT itself can bethe legally valid and canonical version of the filings. In embodiments,the external system may also include modules for managing the fundingthat are desirably kept separate from the distributed ledger. Forexample, owner confidential information and pre-issuance activities suchas valuation of and administering securities (e.g. blocks 220 and 250 ofFIGS. 2A and 2B and blocks 402 and 404 of FIG. 4 ) may be held in theseparate external system. In other embodiments, the smart cascadingfunding platform may comprise a combination of investors 604 with nodeson the distributed ledger and investors 614 without nodes on thedistributed ledger.

Aspects of the disclosure relate to funding companies using a cascadingfinancing scheme wherein a portion of proceeds for funding a firstcompany from a first initial public offering are held back to fundactivities for funding a second company via a subsequent initial publicoffering before being paid out to investors.

Provided herein is a system for financing a company comprising anincubator financial firm configured to manage activities related toraising funds for the company against an equity participation and a putoption on this equity participation to the issuer; and a special vehiclefirm that holds all assets of the entity seeking financing; wherein theincubator financial firm defines an investor offering to raise fundsfrom investors against a share of the capital prior to the initialpublic offering (IPO) and a pro rata share of the raised funds payableafter the IPO and wherein a portion of the proceeds of the IPO is usedto fund a subsequent IPO.

Embodiments of the system include those wherein a portion of fundsadvanced by investors are returned to investors via a pass-throughsecurity based on revenues from sale of equity shares in the subsequentIPO.

Also provided is a company for financing a company comprising afinancial firm configured to manage activities related to raising fundsfor the company against an equity participation and a put option on thisequity participation to the issuer wherein the financial firm defines aninvestor offering to raise funds from investors against a share of thecapital prior to the IPO and a pro rata share of the raised fundspayable after the IPO and wherein a portion of the proceeds of the IPOis used temporarily to fund a subsequent IPO.

Embodiments of the company include those wherein a portion of fundsadvanced by investors are returned to investors via a pass-throughsecurity based on revenues from sale of equity shares in the subsequentIPO.

Also provided is a method for financing a company comprisingestablishing an incubator financial firm configured to manage activitiesrelated to raising funds for the company in an IPO against an equityparticipation and a put option on this equity participation to theissuer, wherein the incubator financial firm defines an investoroffering to raise funds from investors against a share of the capitalprior to the IPO and a pro rata share of the raised funds payable afterthe IPO and wherein a portion of the proceeds of the IPO is usedtemporarily to fund a subsequent IPO; and establishing a special vehiclefirm that holds all assets of the entity seeking financing.

Embodiments of the method include those further comprising defining anoffering for sale of investment shares in a first company; receivingbids from investors for purchase of the investment shares; accepting thebids from investors; tracking revenue associated with the sale of theinvestment shares; retaining a portion of revenue associated with thesale of the investment shares to fund an offering for sale of investmentshares in a subsequent company; and paying parties a portion of therevenue from sale of investment shares in the subsequent company as itis received.

Also provided is a system comprising a computerized system with hardwareand specialized software components for developing, executing andadministering sale of securities, the system comprising a non-transitorycomputer readable storage medium comprising a plurality of computerreadable instructions embodied thereon which, when executed by thecomputerized system, causes the computerized system to: define anoffering for sale of investment shares in a first company; receive bidsfrom investors for purchase of the investment shares; accept the bidsfrom investors; track revenue associated with the sale of the investmentshares; retain a portion of revenue associated with the sale of theinvestment shares to fund an offering for sale of investment shares in asubsequent company; and pay parties a portion of the revenue from saleof investment shares in the subsequent company as it is received.

Also provided is a non-transitory computer readable storage mediumcomprising a plurality of computer readable instructions embodiedthereon wherein the instructions, when executed by a computerized systemwith hardware and specialized software components for developing,executing and administering securities, cause the computerized systemto: define an offering for sale of investment shares in a first company;receive bids from investors for purchase of the investment shares;accept the bids from investors; track revenue associated with the saleof the investment shares; retain a portion of revenue associated withthe sale of the investment shares to fund an offering for sale ofinvestment shares in a subsequent company; and pay parties a portion ofthe revenue from sale of investment shares in the subsequent company asit is received.

The system and methods described herein may be used for privateofferings, initial public offerings or combinations thereof. Forexample, all tranches may be offered to a limited number of privatecapital entities. In other embodiments early tranches may be offered toa limited number of private capital entities, while later tranches maybe offered in an initial public offering.

1. A system for providing a cascading funding platform, the systemcomprising: a first processor configured to determine a funding event, asecond processor configured to determine an initial public offering; adistributed ledger; a cascading funding platform operationally connectedto the first processor, the second processor and the distributed ledger,the cascading funding platform configured to receive, from the firstprocessor, the funding event; generate, based on the funding event, amessage related to an initial subscriber offering to fund a firstcompany; send the message to one or more networked nodes associated withone or more subscribers of the platform; receive bids to purchasefunding tokens via the one or more networked nodes from the one or moresubscribers in response to the message; record bids for the fundingtokens and respective allocated tokens determined by a central processorto the distributed ledger, wherein the distributed ledger is accessibleby the one or more networked nodes; receive from the second processor afirst initial public offering for the first company; generate, based onthe first initial public offering event, a message related to the firstinitial public offering; send the message to one or more networked nodesassociated with one or more owners of the funding tokens; wherein themessage comprises informing the one or more owners that a pro rata shareof the raised funds is payable after the first initial public offering,that a portion of the proceeds of the first initial public offering isto be held back to fund a subsequent initial public offering for asecond company and that a pro rata share of the raised funds is payableafter the subsequent initial public offering; generate a smart contractaccessible to the one or more networked nodes, wherein the smartcontract comprises a payout triggering event; and a plurality ofpredetermined electronic actions for generating a smart contract outputwhen the payout triggering event is met, wherein the smart contractgenerates a payout to the one or more owners automatically when thepayout event is triggered, and record execution of the smart contract tothe distributed ledger.
 2. The system of claim 1 wherein a first payoutevent is completion of the first initial public offering.
 3. The systemof claim 2, wherein the payout is a pro rata share of the funds raisedby the first initial public offering.
 4. The system of claim 1 wherein asecond payout event is completion of the subsequent initial publicoffering.
 5. The system of claim 4, wherein the payout is a pro ratashare of the funds raised by the subsequent initial public offering. 6.The system of claim 1, further comprising one or more processorsconfigured to execute the program instructions to cause the computingsystem to: receive, from a plurality of networked nodes, a plurality ofbids for one or more funding tokens from a plurality of investors,determine, by the central processor, a fractional share of the fundingtokens to allocate to each of the plurality of investors based on therespective bids associated with each investor; and allocate, by one ormore processors, the fractional shares of the funding tokens to each ofthe plurality of investors.
 7. The system of claim 1 wherein the smartcontract is between an issuer of the funding tokens and an investor inthe funding tokens.
 8. The system of claim 1 wherein the secondprocessor determines the subsequent initial public offering.
 9. Thesystem of claim 1 wherein the first processor configured to determine afunding event is remote from the cascading funding platform.
 10. Thesystem of claim 1 wherein the second processor configured to determinean initial public offering is remote from the cascading fundingplatform.
 11. A method for financing a first company and a secondcompany comprising establishing an incubator financial firm configuredto manage activities related to raising funds for the first company in afirst initial public offering and raising funds for the second companyin a subsequent initial public offering; defining an investor offeringto raise funds from investors for the first and second companies againsta pro rata share of the raised funds payable after the first initialpublic offering, holding back a portion of the proceeds of the firstinitial public offering to fund the subsequent initial public offeringagainst a pro rata share of the raised funds payable after thesubsequent initial public offering.
 12. The method of claim 11 furthercomprising paying investors a pro rata share of the funds raised by thefirst initial public offering.
 13. The method of claim 11 furthercomprising paying investors a pro rata share of the funds raised by thesubsequent initial public offering.
 14. The method of claim 11 furthercomprising defining an offering for sale of investment shares in thefirst company; receiving bids from investors for purchase of theinvestment shares; accepting the bids from investors; tracking revenueassociated with the sale of the investment shares; retaining a portionof revenue associated with the sale of the investment shares to fund anoffering for sale of investment shares in a subsequent company; andpaying parties a portion of the revenue from sale of investment sharesin the subsequent company as it is received.
 15. The method of claim 11further comprising establishing a special purpose vehicle company thatholds all assets of the first company.
 16. The method of claim 11further comprising establishing a special purpose vehicle company thatholds all assets of the second company.
 17. The method of claim 11wherein a portion of funds advanced by investors are returned toinvestors via a pass-through security based on revenues from sale ofequity shares in the first initial public offering.
 18. The method ofclaim 11 wherein a portion of funds advanced by investors are returnedto investors via a pass-through security based on revenues from sale ofequity shares in the subsequent initial public offering.
 19. Adistributed networked computer system for managing cascading funding ofa first company and a second company, the distributed network computersystem comprising: a non-transitory computer readable storage mediumhaving program instructions embodied therewith; and one or moreprocessors configured to execute the program instructions to cause thecomputing system to: receive, from a first networked node, a first bidfor one or more shares of the first company from a first investor,wherein a portion of the revenue from sale of the first shares is usedto fund activities related to funding the second company; determine, bya central processor, a fractional share of the first company and afractional share of the second company to allocate to the first investorbased on the first bid; allocate, by one or more processors, thefractional share of the first company and the second company to thefirst user; a distributed ledger for recording bids for the firstcompany and respective allocated shares determined by the centralprocessor, wherein the distributed ledger is accessible by the firstnetworked node; and a smart contract accessible to the first networkednode, wherein the smart contract comprises: a first and second revenuepayout triggering event, wherein the first revenue payout triggeringevent is completion of an initial public offering for the first companyand the second revenue payout triggering event is completion of asubsequent initial public offering for the second company; and aplurality of predetermined electronic actions for generating a smartcontract output when the first and second revenue stream payouttriggering event are met, wherein the smart contract generates a payoutto the first investor automatically when the payout event is triggered;and wherein the execution of the smart contract is recorded to thedistributed ledger.
 20. The distributed networked computer system ofclaim 19 wherein a first payout is a pro rata share of the proceeds ofthe first initial public offering and a second payout is a pro ratashare of the proceeds of the subsequent initial public offering.
 21. Thedistributed network of claim 19, further comprising one or moreprocessors configured to execute the program instructions to cause thecomputing system to: receive, from a plurality of networked nodes, aplurality of bids for one or more shares of the first company from aplurality of investors, determine, by the central processor, afractional share of the one or more shares to allocate to each of theplurality of investors based on the respective bids associated with eachinvestor; and allocate, by one or more processors, the fractional sharesof the first company to each of the plurality of investors.
 22. Thedistributed network of claim 21, wherein a plurality of smart contractsare accessible to the plurality of networked nodes, wherein each of theplurality of smart contracts comprises: a first and second revenuepayout triggering event, wherein the first revenue payout triggeringevent is completion of an initial public offering for the first companyand the second revenue payout triggering event is completion of asubsequent initial public offering for the second company; and aplurality of predetermined electronic actions for generating a smartcontract output when the first and second revenue stream payouttriggering event are met, wherein the smart contract generates a payoutto the first investor automatically when the payout event is triggered;and wherein the execution of the smart contract is recorded to thedistributed ledger.